Jobs budget promises more training and accountability

In hopes of reducing Canada's growing labour shortage, Finance Minister Jim Flaherty's jobs-focused 2013 budget is promising to overhaul the manner in which more than $500 million in federal transfers to the provinces for training is spent. Of that, $300 million per year will be spent on individual job grants for Canadians.

A welder works on a piece of pipe at a Toronto construction. CP/J.P. Moczulski

In hopes of reducing Canada’s growing labour shortage, Finance Minister Jim Flaherty’s jobs-focused budget will overhaul how $500 million in federal transfers to the provinces for training is spent by directing $300 million of that money toward individual job grants.

Flaherty’s 2013-14 fiscal blueprint also will invest $70 million over three years to support the creation of 5,000 paid internships for young people and $4 million to help harmonize provincial apprenticeship rules in hopes the change will result in higher graduation rates.

Flaherty also proposes to spend $126 million over two years to train and prepare disabled Canadians and aboriginals for the workforce, as well as $109 million by 2015 to attract more skilled foreign workers into Canada to fill the labour gap.

The budget represents a major commitment to training Canadians in skilled trades, particularly in the construction sector, where an estimated 319,000 new workers will be needed by 2020.

The shortage is being fueled by a wave of retirements among baby boomers, low apprentice graduation rates and competition for employees from the growing energy sector, which will require more pipe-fitters, crane operators and welders to erect multimillion-dollar projects.

“There are too many jobs that go unfilled in Canada because employers can’t find workers with the right skills,” Flaherty said in his budget speech in Ottawa on Thursday. “Training in Canada is not sufficiently aligned to the skills employers need.”

But of the $795 million that the government allocated for training and jobs by 2015, only $131 million is new spending. The rest will come from three existing federal-provincial agreements, two of which have come under considerable scrutiny for being badly managed and failing to create jobs.

Over the past year, a number of small business associations and training schools — as well as Canada’s largest union, the Canadian Building Trades — have lobbied Flaherty to change the way the federal government funds labour training. They have argued that $2.7 billion in Employment Insurance funds spread over three transfer agreements could be better spent.

The funds, which come in the way of Labour Market Agreements (LMAs), Labour Market Development Agreements (LMDAs) and Labour Market Agreements for Persons With Disabilities (LMAPD), are currently used to train unemployed Canadians and provide apprenticeship assistance or job counselling.

It is unclear exactly how many jobs the programs have created and whether the money has directed people to available professions, and the budget reflects a radical shift away from the current system. More direction from Ottawa on how the money is spent could anger provinces, which have expressed a desire to retain control over the cash.

Flaherty’s changes to the funding centers on the LMAs, which account for $500 million in annual federal training transfers to provinces. While the provinces still will administer the transfers, Flaherty will direct $300 million be allocated annually to Canadians in the form of a job grant they will use to get job and skills training at colleges and labour unions. Previously, labour unions were not allowed to train non-members.

It is a “bold new initiative to transform the way we provide skills training,” Flaherty said.

The grant will provide a maximum of $15,000 to unemployed Canadians, with $5,000 coming from Ottawa, and the remaining $10,000 shared between a province and an employer. The later move likely will aggravate cash-strapped provinces.

Although the budget is vague on how the grant will be administered, Flaherty is signalling businesses will take the lead by investing in existing or new employees. An employer would identify an employee it wants to send to a training college before applying for the federal and provincial portion of the grant. Sarah Anson-Cartwright from the Canadian Chamber of Commerce indicated business was ready to assume a bigger role in training, but cautioned the details would need to be ironed out.

Canadian Building Trades government advisor Christopher Smillie, who lobbied Flaherty to introduced a voucher program to fund apprentice training ahead of the budget, said the union was “extremely happy” with the investment toward training grants.

“This is an opportunity to really affect the (trades) industry in a positive way,” Smillie said.

Because current LMAs don’t expire until next year, the earliest the grants could be made available is in 2014. About 130,000 Canadians are expected to receive the grant by 2018.

It is also unclear how the biggest chunk of the labour money, the $1.95 billion in LMDA funds, will be spent, although it is expected that that program will also be reformed.

“The government will also renegotiate (LMDAs) with provinces and territories, along similar lines,” the budget said, adding that they will be changed to “reorient training toward labour market demand.”

Labour agreements for people with disabilities also will be extended, but with “stronger accountability regimes.” A new $2 million fund will be created to help attract and keep disabled people in the workforce.

The biggest chunk in new jobs spending will come in the form of a $241 million, five-year investment in skills training money for First Nations. It will be distributed as part of welfare payments included in annual funding agreements between Ottawa and more than 600 aboriginal communities across the nation. The government hopes the move will entice more aboriginals into the workforce.

The budget also dedicates $4 million by 2016 to streamline rules around apprenticeship programs across the country in an effort to help more trainees become certified journeymen. Although apprentices now register with trade schools, many drop out due to a lack of funds and travel to other provinces for in-class training or because they get laid off from work (you must be employed to be an apprentice). Some 430,000 Canadians — mostly construction workers — registered for apprenticeship programs in 2010. But only about 36,000 graduated that year.

The budget also announced a new requirement for government-funded construction projects to employ apprentices.

Despite all the efforts to train and employ Canadians, however, the budget dedicates $109 million by 2015 to help attract foreign workers to Canada to meet labour needs. The United States, Europe and Asia have long been deep pools for Canadians labour needs, with 213,000 foreigners arriving in 2012 under the Temporary Foreign Worker Program.